O’May rules

A landmark lease renewal case under the Landlord and Tenant Act 1954 O’May v City of London Real Property Co Ltd (1982).This is often referred to in lease renewal negotiations where one party, usually the landlord, looks to vary the terms of the renewal lease to show ‘modernisation’ of the lease covenants, as the result of changed market practice since the grant of the original lease. In summary, the case held that the tenant’s statutory protection under the 1954 Act meant that the starting point in any renewal is a lease on substantially the same terms, and in effect imposes a ‘presumption against’ change. The party proposing the change needs to prove that it is ‘fair and reasonable in all circumstances’ (including the existing covenants, and not merely current open market practice), and that the tenant can be compensated for the proposed change via an adjustment in the rent.